Superannuation

The government’s move to shift Australia’s superannuation system to a focus on the retirement phase might be a big ask for a population long focussed on accumulation. But it’s a necessary one, as most retirees don’t fully grasp how to make their golden years work for them.

With language that largely matches the original proposal, the government’s objective of superannuation is now a step closer to being enshrined in legislation. While industry support remains broadly strong, some take issue with the bill’s wording, some with whether it’s needed at all.

“Unresponsive. Slow. And not member-focussed.” The Assistant Treasurer took superannuation funds to task for failing members on several levels at a “critical juncture” for the system, repeating the government’s call for a legislated objective of super.

Saying the plan to double the tax rate on super balance amounts exceeding $3 million will improve the sustainability of Australia’s retirement system, the peak industry body nonetheless called for careful retooling of aspects that it says could lead to inequity.

Superannuation funds and pensions posted declining returns in September, weighed down by falls in sharemarkets and an uncertain rates outlook, according to a new report. But they continued to outperform equities, showing diversification pays off.

Superannuation fees can add up to a huge long-term expenditure, costing Australians with modest super balances thousands of dollars a year. But costs may start to fall, with some funds and new players working to disrupt the structure.

The bill would require any future legislation affecting superannuation to comport with the objective of preserving savings “to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.

The third annual Your Future Your Super performance test saw just one MySuper product fail, while 12 per cent of trustee-directed products failed in their first year subject to the test. The results follow a report showing superannuation assets jumped in value since June 2022.

Criticism that superannuation tax concessions are costing the government more than the Age Pension is disingenuous and based on bad analysis, Mercer said in a new report finding super concessions actually save taxpayers in the long run.

Investors thinking of switching super funds should carefully consider the costs involved, make sure they do their paperwork and keep their various retirement accounts straight, says Heffron Consulting’s Meg Heffron. To avoid “nasty surprises”, it all comes down to careful planning.

Switching to a sustainable pension fund is one of the most effective ways to reduce a person’s carbon footprint, with no performance tradeoff required. As the need for climate solutions grows more urgent, the momentum for environmentally friendly investment options in Australia’s $3.5 trillion super sector is gathering pace.

Super funds are failing in their primary duty of understanding customers’ retirement income needs and aren’t doing enough to address known data gaps, the regulators said, criticising their slow progress under the retirement income covenant.